CTC vs gross salary vs in-hand salary
These three numbers are often confused, but they mean very different things. CTC(cost to company) is the total yearly cost your employer bears for you — it includes cash components as well as money that never touches your bank account. Gross salaryis what's left after removing the non-cash parts of CTC — this is the salary your income tax is actually calculated on. In-hand salary (take-home) is gross salary minus your own PF contribution, professional tax and income tax — the amount that's credited to your account every month.
What's inside CTC that you don't actually receive
Two components inflate CTC without adding to your take-home pay:
- Employer PF contribution — typically 12% of basic pay, deposited directly into your EPF account by your employer. It's a cost to the company and grows your retirement savings, but it's not cash you can spend today.
- Gratuity accrual — many CTC structures set aside roughly 4.81% of basic pay every year toward the gratuity you'll receive only when you leave after 5+ years of service.
Together these can be 8–10% of CTC that shows up in your offer letter but never in your salary slip's "net pay" line — which is exactly why in-hand salary is always noticeably less than CTC ÷ 12.
FY 2026-27 new regime income tax slabs
The new tax regime is now the default for all salaried taxpayers. It applies these slab rates to your taxable income (gross salary minus the standard deduction of ₹75,000), with no further deductions for HRA, 80C or professional tax:
| Taxable income slab | Rate |
|---|---|
| ₹0 – ₹4,00,000 | 0% |
| ₹4,00,000 – ₹8,00,000 | 5% |
| ₹8,00,000 – ₹12,00,000 | 10% |
| ₹12,00,000 – ₹16,00,000 | 15% |
| ₹16,00,000 – ₹20,00,000 | 20% |
| ₹20,00,000 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
A rebate under Section 87A brings tax down to zero for taxable income up to ₹12,00,000, and marginal relief smooths out the jump just above that threshold so a small increase in income doesn't cause a disproportionate tax hit.
Worked example
Say your CTC is ₹12,00,000, with basic at 40% of CTC (₹4,80,000) and HRA at 40% of basic (₹1,92,000), employer PF and gratuity accrual included in CTC, no rent paid, and ₹2,400 professional tax for the year. Gross salary works out to about ₹11,19,312 after removing the employer PF and gratuity accrual. Under the new regime, taxable income comes to roughly ₹10,44,312 — but this is fully wiped out by the Section 87A rebate, so tax is ₹0 and your in-hand pay is about ₹88,276/month. Under the old regime (with no HRA exemption claimed here since no rent is paid), taxable income is about ₹10,09,312, tax comes to ₹1,19,910, and in-hand pay drops to about ₹78,284/month — so in this scenario the new regime puts ₹1,19,910 more in your pocket for the year.
In-hand salary by CTC
Want a quick number without entering your own figures? See typical take-home pay for common CTC levels: ₹3 LPA, ₹4 LPA, ₹5 LPA, ₹6 LPA, ₹7 LPA, ₹8 LPA, ₹9 LPA, ₹10 LPA, ₹12 LPA, ₹15 LPA, ₹18 LPA, ₹20 LPA, ₹25 LPA, ₹30 LPA.
When the old regime still wins
Despite the new regime's simplicity and the higher rebate limit, the old regime can still come out ahead if you have large deductions to claim — typically a combination of high rent paid in a metro (HRA exemption), a full ₹1.5 lakh under Section 80C (PF, ELSS, life insurance, etc.), and home loan interest under Section 24(b). The more of these you can genuinely claim, the more likely the old regime beats the new one on take-home pay — run both numbers above to check your own case rather than assuming either regime is automatically better.